Turkcell Iletisim Hizmetleri: Fourth Quarter and Full Year 2017 Results

Please note that all financial data is consolidated and comprises that
of Turkcell Iletisim Hizmetleri A.S. (the Company, or Turkcell)
and its subsidiaries and associates (together referred to as the
Group), unless otherwise stated.

We have three reporting segments:

"Turkcell Turkey" which comprises all of our telecom related
businesses in Turkey (as used in our previous releases, this term
covered only the mobile businesses). All non-financial data
presented in this press release is unconsolidated and comprises
Turkcell Turkey only figures, unless otherwise stated. The terms
"we", "us", and "our" in this press release refer only to Turkcell
Turkey, except in discussions of financial data, where such terms
refer to the Group, and except where context otherwise requires.

Turkcell International which comprises all of our telecom
related businesses outside of Turkey.

Other subsidiaries which is mainly comprised of our information
and entertainment services, call center business revenues,
financial services revenues and inter-business eliminations.

In this press release, a year-on-year comparison of our key indicators
is provided and figures in parentheses following the operational and
financial results for December 31, 2017 refer to the same item as at
December 31, 2016. For further details, please refer to our
consolidated financial statements and notes as at and for December 31,
2017, which can be accessed via our website in the investor relations
section (www.turkcell.com.tr).

Selected financial information presented in this press release for the
fourth quarters and for the full year 2016 and 2017 is based on IFRS
figures in TRY terms unless otherwise stated.

In accordance with our strategic approach and IFRS requirements,
Fintur is classified as held for sale and reported as discontinued
operations as of October 2016. Certain operating data that we
previously presented with Fintur included has been restated without
Fintur.

In the tables used in this press release totals may not foot due to
rounding differences. The same applies to the calculations in the text.

Note: Net income excluding the impact of the tax settlement
within the scope of Law No.7061 has been displayed as a separate line in
order to facilitate comparison of current quarter and full year
performance to prior periods.

FULL YEAR HIGHLIGHTS

2017 has been a remarkable year in terms of both operational and
financial results

Record operational results achieved:

Mobile churn at 20.5%, lowest of the past decade

36.7 million total subscriber base in Turkey; 1.5 million net
additions

All time high quarterly Group revenue and EBITDA, highest EBITDA
margin of past 9 years

Group revenues and EBITDA up 15.4% and 26.8%, respectively with
EBITDA margin of 37.3% up 3.4pp year-on-year

Turkcell Turkeys data and digital services revenues up 22.9%

Group net income at TRY216 million (TRY351 million)

Group net income doubled to TRY716 million excluding TRY500
million net income impact of tax settlement within the scope of
Law No.7061

On January 25, 2018, Fintur signed a binding agreement with Silknet
JSC, a joint stock company in Georgia, to transfer its 100%
shareholding in Geocell, for US$153 million.

(1) EBITDA is a non-GAAP financial measure. See page 14 for the
explanation of how we calculate Adjusted EBITDA and its reconciliation
to net income.(2) Excluding the TRY500 million net income impact
of the tax settlement in Q417 and TRY136 million net income impact of
the tax amnesty in Q316(3) Excluding license fee(4) Please
note that this paragraph contains forward looking statements based on
our current estimates and expectations regarding market conditions for
each of our different businesses. No assurance can be given that actual
results will be consistent with such estimates and expectations. For a
discussion of factors that may affect our results, see our Annual Report
on Form 20-F for 2016 filed with U.S. Securities and Exchange
Commission, and in particular, the risk factor section therein.(5)
Share among mobile voice users excluding subscribers who have not used
their lines in the last 3 months(6) Multiplay subscribers with TV:
Internet + TV users & internet + TV + voice usersFor further
details, please refer to our consolidated financial statements and notes
as at and for December 31, 2017 which can be accessed via our web site
in the investor relations section (www.turkcell.com.tr).

COMMENTS BY KAAN TERZIOGLU, CEO

Digital transformation has been the key driver behind the 23% revenue
growth, 35% EBITDA
1
growth and, excluding the
one-off impact of the tax settlement, a 52% net income increase

2017 was a year in which we reached important milestones in Turkcells
digital transformation, including the launch of a new digital brand and
new digital services, realized a record revenue increase and subscriber
additions and gained the largest revenue generator status in the Turkish
telecoms market. Moreover, solid financial and operational results led
to a record high share price performance.

As Turkcell Group we registered the highest top line growth performance
of the past 10 years at 23.4%, and an EBITDA margin increase of 3
percentage points in 2017, thanks to our 4.5G investments and successful
digitalization model. We thereby, achieved higher results both in
revenue growth and operational profitability than our guidance, which we
upgraded twice during the year. We have brought forward our investments
to meet our customers rising digital demands. Accordingly, we
registered an operational capex2 of 3.7 billion TL, which has
allowed us to widen the quality gap between us and our competitors. As
we have completed the 20th month of our 4.5G network, one of the main
constituents of our growth, we have accelerated efforts towards 5G
technology development. With rising customer satisfaction and record
customer retention of the past 10 years, Turkcell Turkey now has 36.7
million subscribers on approximately 1.5 million net subscriber adds.
Moreover, 56%3 of our mobile subscribers are using at least
one of our digital services.

As Turkeys leading digital operator, in addition to providing legacy
communication services, we continued to advance our existing digital
services, while expanding the portfolio that enriches our customers
1440 daily minutes. Our digital services and solutions play a bigger
part in our customers lives than the mere 31-minute4 phone
call initiated by an average phone user, or the raw data consumed on the
OTT services.

Within this framework, we enhanced the messaging, audio and video
calling capabilities of our digital communications platform BiP, by
adding the group video call feature. With 2 billion messages sent in
December 2017 alone, BiP surpassed the number of SMS messages sent,
marking a first. Enriched with our telco capabilities, BiP offers a wide
variety of solutions and services ranging from multi-screen calls to
digitalized customer services, from gaming to money transfer and from
app-to-network calls to web-based communication.

For the first time this year, we began live concert broadcasts on fizy,
Turkeys most popular music application. This summers concerts, each of
which exceeded 200 thousand views, saw fizy rank first in App Store
downloads. In total, 2.2 billion songs were streamed on fizy this year.
At the time of our 4.5G launch, we said that we will change the TV
experience on the small screen, a claim we have now delivered on with
record viewing times on TV+. The mobile users daily average TV+ viewing
duration rose by 29 minutes year-on-year to over 63 minutes. Our digital
publishing app, Dergilik, which offers users 413 magazines and 75
newspapers, has created a significant revival in the publishing
industry. In September, taking courage from the attention received by
our digital services, we launched the digital brand, Lifecell, and its
accompanying tariffs, swiftly reaching 242 thousand subscribers.
Lifecell offers all communication services via mobile internet and the
digital platform, including calling and messaging. Our strong presence
in the digital space is evidenced by our ranking as the fourth publisher
on Google Play, and third in the App Store according to the past twelve
months' downloads.

Our search engine Yaani, launched this quarter, positioned Turkey among
the countries with their own search engines. Yaani, designed to
understand the unique syntax of Turkish, provides its users with easier
access to information. Integrated with Turkcell services, Yaani
simplifies the lives of its users. With Yaani, downloaded 3.5 million
times, Turkcell is well positioned to carve its share of the digital
advertising market. In accordance with our targeted contribution to the
digital transformation of the economy, along with Yaani, we launched our
e-commerce platform, the second phase of our digital operator strategy.
On this platform, users are now able to securely log into digital
services with GSMA-enabled Mobile Connect technology, and complete their
shopping through easy and secure payment using Paycell.

Differentiated financing solutions from Turkcell

Turkcell Finansman A.. (Financell), established to provide flexible
financing solutions for our customers smart device needs, continued to
provide services at Turkcells three thousand stores across Turkey.
Granting approximately 4.3 million loans, it has reached a total loan
portfolio of 4.2 billion TL. With Financell, we have already met our
2018 year-end smartphone penetration target at the end of the second
quarter. As of the fourth quarter, this ratio had reached 72%.

Given the sheer scope of techfin, our Paycell brand reached over two
thousand member companies and over five million users. Paycell,
providing fast and easy payment services, has, among others, offered
utility bill payments, fuel payments without leaving the vehicle, and
Turkcell tariff purchases.

Leveraging our technology strengths in new business areas

Through Turkcell Enerji zmleri (Energy Solutions), a company we
established this year, we will provide energy management technologies.
Besides providing our customers with uninterrupted electricity through
Turkcells service quality, we are excited to offer systems and
solutions that will enable more efficient energy consumption.

Meanwhile, as one of the five founding participants, we commenced our
studies into contribution to the Joint Initiative Group for Turkeys
Automobile Project. The goal is to produce Turkeys first domestic car,
and we will leverage our strong technological infrastructure and
software capabilities to this end.

Our technology contributes to the value we place on human life

In accomplishing this work, we are ever aware of the potential to make a
tangible difference in the lives of our disabled customers. We developed
an app for the hearing impaired, having thus far developed similar apps
more for the use of the visually impaired. Our My Sign Language app
offered to hearing impaired individuals and their families in Turkey has
registered one million downloads. Elsewhere, our Hello Hope app,
developed for our Syrian guests, has registered more than 750 thousand
downloads to date since its launch in September 2016. In facilitating
the lives of millions of Syrian guests, the opportunity to showcase this
effort on international platforms is a source of pride both for Turkcell
and Turkey.

We have distributed 54% of our net income since 2010

With the 3 billion TL in dividends paid out in 2017, we have distributed
54% of our net income recorded since 2010, abiding by our dividend
policy. Today we also announced TRY1,240 million dividend proposal for
year 2017, which reflects our commitment to our dividend policy.

We achieved our targets in 2017, and will continue to grow in 2018
through digital services

The global reach of our digital experience, which has propelled customer
loyalty and preferences, is among our focus areas for future periods. We
will continue to initiate new projects that strengthen our positioning
as the digital operator with global services. Accordingly, we have
accelerated our B2B efforts. Our subsidiary, Lifecell Ventures, which is
extending Turkcells digital footprint to global markets, sold its first
digital service (lifebox) to Moldcell of Moldova in the last quarter.

On the back of our solid fundamentals cemented in 2017, and our 2018
strategy, we target5 Group revenue growth of 13-15%, an
EBITDA margin of 33-35% and an operational capex to sales ratio2
of 18-19%. We plan to also announce our mid-term targets at the Turkcell
Capital Markets Day on March 14th, 2018 in stanbul. Meanwhile, we will
present our success story, an exemplary among many global operators, at
the GSMA Mobile World Congress, one of the key platforms of our industry.

We take this opportunity to once again thank our Board of Directors and
the Turkcell team for their outstanding performance, dedication and
compassion, which fully embodies the Turkcell spirit. We would also like
to express our gratitude to our customers, who have continued to show
their trust in us throughout our success story.

(1) EBITDA is a non-GAAP financial measure. See page 14 for the
explanation of how we calculate Adjusted EBITDA and its reconciliation
to net income.(2) Excluding license fee(3) Share among
mobile voice users excluding subscribers who have not used their lines
in the last 3 months(4) Duration of a phone call initiated by an
average phone user per day(5) Please note that this paragraph
contains forward looking statements based on our current estimates and
expectations regarding market conditions for each of our different
businesses. No assurance can be given that actual results will be
consistent with such estimates and expectations. For a discussion of
factors that may affect our results, see our Annual Report on Form 20-F
for 2016 filed with U.S. Securities and Exchange Commission, and in
particular, the risk factor section therein.

FINANCIAL AND OPERATIONAL REVIEW

Financial Review of Turkcell Group

Profit & Loss Statement

(million TRY)

Quarter

Year

Q416

Q417

y/y %

FY16

FY17

y/y %

Revenue

4,043.6

4,666.0

15.4%

14,285.6

17,632.1

23.4%

Cost of revenue1

(2,608.3)

(3,016.2)

15.6%

(9,236.6)

(11,350.2)

22.9%

Cost of revenue
1
/Revenue

(64.5%)

(64.6%)

(0.1pp)

(64.7%)

(64.4%)

0.3pp

Depreciation and amortization

(604.3)

(700.5)

15.9%

(2,203.2)

(2,597.0)

17.9%

Gross Margin

35.5%

35.4%

(0.1pp)

35.3%

35.6%

0.3pp

Administrative expenses

(190.0)

(67.3)

(64.6%)

(721.8)

(645.2)

(10.6%)

Administrative expenses/Revenue

(4.7%)

(1.4%)

3.3pp

(5.1%)

(3.7%)

1.4pp

Selling and marketing expenses

(478.5)

(544.1)

13.7%

(1,910.9)

(2,005.4)

4.9%

Selling and marketing expenses/Revenue

(11.8%)

(11.7%)

0.1pp

(13.4%)

(11.4%)

2.0pp

EBITDA
2

1,371.1

1,738.9

26.8%

4,619.5

6,228.3

34.8%

EBITDA Margin

33.9%

37.3%

3.4pp

32.3%

35.3%

3.0pp

EBIT
3

766.8

1,038.4

35.4%

2,416.3

3,631.3

50.3%

Net finance income / (costs)

(198.3)

(106.7)

(46.2%)

(172.8)

(322.9)

86.9%

Finance income

493.9

471.3

(4.6%)

1,064.8

1,090.4

2.4%

Finance costs

(692.2)

(578.0)

(16.5%)

(1,237.6)

(1,413.3)

14.2%

Other income / (expense)

(44.4)

(625.8)

n.m

(234.3)

(698.9)

198.3%

Non-controlling interests

(17.7)

(20.5)

15.8%

(51.7)

(58.6)

13.3%

Income tax expense

(111.3)

(69.5)

(37.6%)

(423.2)

(571.8)

35.1%

Discontinued operations

(44.4)

-

n.m

(42.2)

-

n.m

Net Income

350.7

215.9

(38.4%)

1,492.1

1,979.2

32.6%

Net Income excluding tax settlement
4

350.7

716.0

104.2%

1,627.6

2,479.3

52.3%

(1) Including depreciation and amortization expenses.(2) EBITDA is
a non-GAAP financial measure. See page 14 for the explanation of how we
calculate Adjusted EBITDA and its reconciliation to net income.(3)
EBIT is a non-GAAP financial measure and is equal to EBITDA minus
depreciation and amortization expenses.(4) Excluding the TRY500
million net income impact of the tax settlement in Q417 and TRY136
million net income impact of the tax amnesty in Q316

Revenue of the Group rose by 15.4% year-on-year in Q417.
Increased ARPU level at Turkcell Turkey with data and digital services
growth and a larger subscriber base with a higher postpaid ratio were
the main drivers of growth.

Turkcell Turkey revenues, at 87% of Group revenues, grew by 13.0% to
TRY4,041 million (TRY3,576 million).

Data and digital services revenues grew by 22.9% to TRY2,735 million
(TRY2,226 million).

Rising smartphone penetration, an increased number of data users
and higher data consumption per user were the main drivers of data
and digital services revenue growth on the mobile side. On the
fixed side main drivers were a larger subscriber base, price
adjustments, and increased share of multiplay subscribers with TV.

Wholesale revenues grew by 11.4% to TRY153 million (TRY137 million)
due to increased carrier traffic and the positive impact of TRY
depreciation on FX based revenues.

We reported revenues of TRY104 million originating from our Universal
Service Project, which is aimed at building and operating
infrastructure in unserved rural areas. Contractually, this project is
financed by the Universal Service Fund on a net cost basis.

Turkcell International revenues, constituting 6% of Group revenues, rose
by 14.6% to TRY288 million (TRY252 million) mainly with the increase in
lifecell and BeST revenues.

Other subsidiaries' revenues, at 7% of Group revenues, which includes
information and entertainment services, call center revenues and
revenues from financial services grew by 56.3% to TRY337 million (TRY216
million). This was mainly driven by the increase in the consumer finance
companys revenues to TRY183 million (TRY90 million) in Q417.

Data and digital services revenues, at 67% of Turkcell Turkey
revenues, grew by 51.2% to TRY10,304 million (TRY6,814 million).

Wholesale revenues grew by 29.5% to TRY587 million (TRY453 million).

We reported revenues of TRY258 million originating from our Universal
Service Project.

Turkcell International revenues rose by 22.0% to TRY1,067 million
(TRY875 million).

Other subsidiaries' revenues grew by 78.9% to TRY1,115 million (TRY623
million).

Cost of revenue slightly increased to 64.6% (64.5%) as a
percentage of revenues in Q417. The increase in consumer finance company
funding costs (0.5pp) and other cost items (1.4pp) was offset by the
decline in GSM related equipment expenses (1.8pp).

For the full year, cost of revenue decreased to 64.4% (64.7%) as a
percentage of revenues. This was mainly due to the decrease in treasury
share (1.0pp), radio costs (1.0pp), interconnect costs (0.8pp) and
depreciation and amortization (0.7pp), despite the rise in consumer
finance company funding costs (1.1pp), GSM related equipment expenses
(0.8pp) and other cost items (1.3pp).

Administrative expenses declined to 1.4% (4.7%) as a percentage
of revenues in Q417, mainly due to the change we made in our doubtful
receivable provision assumptions based on improvement in collection
performance which had a positive impact of TRY133 million.

For the full year, administrative expenses declined to 3.7% (5.1%)
mainly due to the change made in doubtful receivable provision
assumptions as explained above.

Selling and marketing expenses slightly declined to 11.7% (11.8%)
as a percentage of revenues in Q417. The decline in prepaid subscriber
frequency usage fees (0.7pp) and other cost items (0.2pp) was offset by
the increase in marketing expenses (0.8pp).

For the full year, selling and marketing expenses as a percentage of
revenues declined to 11.4% (13.4%) on the back of the fall in prepaid
subscriber frequency usage fees (0.8pp), marketing expenses (0.6pp),
selling expenses (0.2pp) and other cost items (0.4pp).

EBITDA
1
rose by 26.8% year-on-year in Q417
leading to a 3.4pp improvement in EBITDA margin to 37.3% (33.9%). This
was mainly due to the solid rise in revenues and effective management of
costs. Cost of revenue (excluding depreciation and amortization)
remained unchanged, while administrative expenses and selling and
marketing expenses declined by 3.3pp and 0.1pp, respectively as a
percentage of revenues.

Turkcell Turkeys EBITDA grew by 27.7% to TRY1,566 million (TRY1,227
million) with an EBITDA margin of 38.8% (34.3%) on 4.5pp improvement.

Turkcell International EBITDA decreased by 6.3% to TRY64 million
(TRY68 million), which resulted in an EBITDA margin of 22.2% (27.2%).
This was mainly due to the increase in radio costs and device sales.

The EBITDA of other subsidiaries rose by 42.9% to TRY109 million
(TRY76 million) with the increasing contribution of our consumer
finance company.

For the full year, EBITDA grew by 34.8% with an EBITDA margin of 35.3%
(32.3%) on 3.0pp rise. Direct cost of revenues (excluding depreciation
and amortization) rose by 0.4pp, while administrative expenses and
selling and marketing expenses fell by 1.4pp and 2.0pp, respectively.

(1) EBITDA is a non-GAAP financial measure. See page 14 for the
explanation of how we calculate Adjusted EBITDA and its reconciliation
to net income.

Turkcell Turkeys EBITDA rose by 34.4% to TRY5,594 million (TRY4,161
million), while the EBITDA margin rose 3.7pp to 36.2% (32.5%).

Turkcell International EBITDA grew by 12.1% to TRY264 million (TRY235
million), while the EBITDA margin was at 24.7% (26.9%).

The EBITDA of other subsidiaries rose by 65.9% to TRY370 million
(TRY223 million).

In Q417, we changed our doubtful receivable provision assumptions based
on improvement in collection performance, which had a positive impact of
TYR133 million on EBITDA.

Net finance expense declined to TRY107 million (TRY198 million)
in Q417 year-on-year. This was mainly due to lower translation losses in
Q417, despite the decline in interest income from contracted
receivables, and rise in interest expense of loans.

For the full year net finance expense rose to TRY323 million (TRY173
million). This was mainly due to the decline in interest income from
contracted receivables and the increased interest expense of loans
despite lower translation losses and positive impact from the fair
market value changes of the swap contracts.

Income tax expense decreased 37.6% year-on-year in Q417. For the
full year the income tax expense increased 35.1%. Please see Appendix A
for details.

Net income of the Group declined to TRY216 million (TRY351
million) year-on-year in Q417, mainly due to the TRY575 million
provision booked for tax settlement within the scope of Law No.7061,
which had a TRY500 million impact on net income after tax. Excluding the
impact of this provision, net income rose by 104.2% to TRY716 million
driven by a solid operational performance and lower translation losses.

Turkcell Turkeys net income decreased to TRY179 million (TRY386
million) in Q417 mainly due to the provision booked for tax settlement
as explained above. Excluding the impact of this provision, net income
rose by 75.8% to TRY679 million.

For the full year, Group net income increased to TRY1,979 million
(TRY1,492 million), mainly due to solid operational performance and
better FX results, despite the provision booked for tax settlement in
Q417 and higher depreciation and amortization expenses. In FY16 we also
booked provisions for tax amnesty within the scope of Article 6736,
which had a TRY136 million impact on net income after tax. Excluding the
respective provision amounts booked for each year, net income rose by
52.3% to TRY2,479 million.

Turkcell Turkeys net income increased to TRY1,962 million (TRY1,480
million) in FY17 mainly due to the drivers explained above with respect
to the rise in Group net income. Excluding the respective provision
amounts booked for each year, net income rose by 52.4% to TRY2,462
million (TRY1,615 million).

Total cash & debt: Consolidated cash as of December 31, 2017
declined to TRY4,712 million from TRY4,906 million as of September 30,
2017. TRY2,598 million (US$689 million) of consolidated cash was
denominated in US$, TRY1,073 million (EUR238 million) in EUR and
TRY1,041 million in TRY and other local currencies.

Consolidated debt as of December 31, 2017 rose to TRY12,536 million from
TRY11,867 million as of September 30, 2017. This was mainly due to the
increased debt portfolio of our consumer finance company and the
translation increase in the FX denominated debt portfolio of Turkcell
Turkey, due to TRY depreciation against the US$ and EUR.

Turkcell Turkeys debt was TRY8,475 million, of which TRY3,768 million
(US$999 million) was denominated in US$, TRY4,656 million (EUR1,031
million) in EUR and the remaining TRY51 million in TRY.

The debt balance of lifecell was TRY521 million, denominated in UAH.

Our consumer finance company had a debt balance of TRY3,536 million,
of which TRY988 million (US$262 million) was denominated in US$, and
TRY973 million (EUR215 million) in EUR with the remaining TRY1,575
million in TRY (please note that the figures in parentheses refer to
US$ or EUR equivalents).

TRY8,392 million of our consolidated debt is set at a floating rate,
while TRY4,278 million will mature within less than a year.

Net debt as of December 31, 2017 was at TRY7,824 million with a net debt
to EBITDA ratio of 1.26 times. Excluding consumer finance company
consumer loans, our telco only net debt was at TRY3,576 million with a
leverage of 0.59 times.

Turkcell Groups short position was at US$144 million as at the end of
Q417, thus within our comfort zone, which is below US$500 million as
advised by our Board considering the size of our operations and balance
sheet. (Please note that this figure takes into account advance
payments, hedging and excluding FX swap transactions for TL borrowing).

Cash flow analysis: Capital expenditures, including
non-operational items amounted to TRY1,806.6 million in Q417. The cash
flow item noted as other in Q417 included mainly the positive impact
of the change in working capital.

For the full year, capital expenditures, including non-operational items
were at TRY4,090.4 million. The cash flow item noted as other included
the payment of the final installment of the 4.5G license fee (TRY1,535
million) and mainly the negative impact of the change in working capital
(TRY831 million).

In Q417 and FY17, operational capital expenditures (excluding license
fees) at the Group level were at 35.7% and 21.0% of total revenues,
respectively.

Consolidated Cash Flow (million TRY)

Quarter

Year

Q416

Q417

FY16

FY17

EBITDA
1

1,371.1

1,738.9

4,619.5

6,228.3

LESS:

Capex and License

(1,133.5)

(1,806.6)

(3,494.7)

(4,090.4)

Turkcell Turkey

(980.7)

(1,716.6)

(3,144.4)

(3,821.5)

Turkcell International
2

(149.7)

(82.8)

(336.7)

(246.6)

Other Subsidiaries2

(3.1)

(7.2)

(13.6)

(22.3)

Net interest Income/ (expense)

324.1

250.0

616.9

395.6

Other

(939.6)

541.3

(3,020.0)

(2,366.3)

Net Change in Debt

784.0

82.2

4,411.9

1,492.9

Cash generated / (used)

406.1

805.8

3,133.6

1,660.0

Cash balance before dividend payment

6,052.4

5,712.3

6,052.4

7,712.3

Dividend paid

-

(1,000.0)

-

(3,000.0)

Cash balance after dividend payment

6,052.4

4,712.3

6,052.4

4,712.3

(1) EBITDA is a non-GAAP financial measure. See page 14 for the
explanation of how we calculate adjusted EBITDA and its reconciliation
to net income.(2) The impact from the movement of reporting
currency (TRY) against local currencies of subsidiaries in other
countries is included in these lines.

Operational Review of Turkcell Turkey

Summary of Operational Data

Quarter

Year

Q416

Q417

y/y%

FY16

FY17

y/y%

Number of subscribers (million)

35.3

36.7

4.0%

35.3

36.7

4.0%

Mobile Postpaid (million)

17.4

18.5

6.3%

17.4

18.5

6.3%

Mobile M2M (million)

2.1

2.3

9.5%

2.1

2.3

9.5%

Mobile Prepaid (million)

15.7

15.6

(0.6%)

15.7

15.6

(0.6%)

Fiber (thousand)

1,043.9

1,204.3

15.4%

1,043.9

1,204.3

15.4%

ADSL (thousand)

818.0

921.4

12.6%

818.0

921.4

12.6%

IPTV (thousand)

359.7

505.9

40.6%

359.7

505.9

40.6%

Churn (%)

Mobile Churn (%)1

5.6%

7.1%

1.5pp

24.6%

20.5%

(4.1pp)

Fixed Churn (%)

5.3%

5.7%

0.4pp

18.9%

19.6%

0.7pp

ARPU (Average Monthly Revenue per User) (TRY)

Mobile ARPU, blended

29.2

30.4

4.1%

26.8

29.8

11.2%

Mobile ARPU, blended (excluding M2M)

30.9

32.3

4.5%

28.3

31.6

11.7%

Postpaid

41.6

43.8

5.3%

39.2

43.0

9.7%

Postpaid (excluding M2M)

46.8

49.6

6.0%

44.0

48.5

10.2%

Prepaid

15.6

15.1

(3.2%)

13.9

14.9

7.2%

Fixed Residential ARPU, blended

51.1

55.2

8.0%

51.1

53.6

4.9%

Average mobile data usage per user (GB/user)

2.8

4.3

53.6%

2.4

3.9

62.5%

Mobile MOU (Avg. Monthly Minutes of usage per subs) blended

331.3

353.4

6.7%

323.9

347.1

7.2%

(1) In Q117, our churn policy was revised to extend from 9 months to 12
months (the period at the end of which we disconnect prepaid subscribers
who have not topped up above TRY10.) Additionally, under our revised
policy, prepaid customers who last topped up before March will be
disconnected at the latest by year-end. Please note that figures for
prior periods have not been restated to reflect this change in churn
policy.

Our mobile subscriber base continued to expand and reached 34.1 million
in FY17. We registered 1.0 million net subscriber additions during the
year, marking the highest net additions of the past 6 years. This was
driven by 1.1 million net additions to postpaid subscribers, comprising
54.2% (52.5%) of our total mobile subscriber base. In Q417 the mobile
subscriber base declined by 537 thousand as 596 thousand prepaid
subscribers, who last topped up between January and March, were
disconnected in accordance with our churn policy. Meanwhile, our
postpaid subscribers rose by 103 thousand net additions.Our fixed
subscriber base exceeded 2.1 million in Q417 with 52 thousand quarterly
net additions. We registered 264 thousand net additions during the year,
of which 160 thousand were fiber and 103 thousand were ADSL subscribers.
IPTV subscribers reached 506 thousand with 39 thousand quarterly and 146
thousand annual net additions. Total TV users, including OTT TV only
subscribers, reached 2.2 million. The Turkcell TV+ mobile application
has been downloaded 6.6 million times as of February 2018.Mobile
churn declined 4.1pp for the full year, marking the lowest churn rate of
the past 10 years. This was driven by our value focused customer
strategy, service quality, an attractive digital services portfolio and
targeted retention campaigns in 2017. In Q417, our mobile churn rate
rose 1.5pp year-on-year due to the disconnection of prepaid subscribers
in line with our churn policy as explained above. Excluding this impact,
our mobile churn would have been at 5.5%. Our fixed churn rate was 5.7%
for Q417 and 19.6% for the full year.Mobile ARPU (excluding M2M)
rose by 4.5% year-on-year in Q417. For the full year, mobile ARPU
(excluding M2M) rose by 11.7%. Mobile ARPU growth was mainly driven by
increased data and digital services usage, our upsell efforts, price
adjustment and larger postpaid subscriber base. ARPU growth was also
supported by the increased share of triple play subscribers, who use
voice, data and digital services combined, to 55.8%1.Fixed
Residential ARPU rose 8.0% in Q417 year-on-year and 4.9% for the full
year, positively impacted by the increase in multiplay subscribers with
TV2 to 44.4% of total residential fiber subscribers, along
with upsell efforts.Average mobile data usage per user rose by
53.6% in Q417 year-on-year and 62.5% for the full year driven by
increased usage of data and digital services offerings. Average mobile
data usage of 4.5G users was at 5.9GB in Q417 and 6.0GB in December. Our
smartphone penetration reached 72% in FY17, while 4.5G enabled
smartphones reached 68% of total smartphones.

lifecell (Ukraine) revenues declined 3.4% year-on-year in Q417 in
local currency terms, mainly due to the MTR cut from UAH0.23/min to
UAH0.15/min, effective as of January 1, 2017. lifecells EBITDA in local
currency terms decreased 8.7% year-on-year leading to an EBITDA margin
of 26.1%. This was mainly due to the increase in radio costs in Q417.
lifecells revenues in TRY terms rose by 7.5%, while EBITDA increased by
1.5% year-on-year in Q417.

For the full year, lifecell revenues in local currency terms rose by
0.8% with an EBITDA margin of 27.2%. In TRY terms, lifecell registered
revenue growth of 16.5% while EBITDA rose by 13.0%.

lifecell* Operational Data

Quarter

Year

Q416

Q417

y/y%

FY16

FY17

y/y%

Number of subscribers (million)
1

12.4

11.1

(10.5%)

12.4

11.1

(10.5%)

Active (3 months)
2

9.2

8.0

(13.0%)

9.2

8.0

(13.0%)

MOU (minutes) (12 months)

141.3

135.7

(4.0%)

140.5

129.4

(7.9%)

ARPU (Average Monthly Revenue per User),

blended (UAH)

35.2

37.0

5.1%

31.3

33.8

8.0%

Active (3 months) (UAH)

46.0

52.3

13.7%

40.6

47.7

17.5%

(1) We may occasionally offer campaigns and tariff schemes that have an
active subscriber life differing from the one that we normally use to
deactivate subscribers and calculate churn.(2) Active subscribers
are those who in the past three months made a revenue generating
activity.(*) Since July 10, 2015, we hold a 100% stake in lifecell.

lifecell maintained its leadership in Ukraine in terms of 3G+ network
geographical coverage. lifecell continued to grow three-month active 3G
data users, which exceeded 3.8 million as at the end of the quarter.
Meanwhile, data usage per 3G user posted 75% growth in Q417 on a
year-on-year basis. lifecell continued to lead the market in terms of
smartphone penetration, which reached 68% as at the end of Q417.

On January 31, 2018, lifecell participated in the 2600 MHz frequency
tender as part of the 4G License Tender. lifecell has been awarded the
license for 15 years, bidding UAH909 million for the 15 MHz frequency
band, the total of Lot 1 and Lot 2. Within the scope of the 4G tender,
the 1800 MHz frequency tender is expected to be held in the first
quarter of 2018.

BeST*

Quarter

Year

Q416

Q417

y/y%

FY16

FY17

y/y%

Number of subscribers (million)

1.6

1.6

-

1.6

1.6

-

Active (3 months)

1.2

1.3

8.3%

1.2

1.3

8.3%

Revenue (million BYN)

26.5

30.4

14.7%

98.6

111.8

13.4%

EBITDA (million BYN)

1.6

1.8

12.5%

3.9

4.3

10.3%

EBITDA margin

6.1%

6.0%

(0.1pp)

4.0%

3.8%

(0.2pp)

Net loss (million BYN)

(9.9)

(9.4)

(5.1%)

(43.5)

(42.0)

(3.4%)

Capex (million BYN)

3.3

5.1

54.5%

11.1

13.3

19.8%

Revenue (million TRY)

44.5

58.2

30.8%

150.0

210.4

40.3%

EBITDA (million TRY)

2.8

3.5

25.0%

6.2

8.0

29.0%

EBITDA margin

6.2%

6.0%

(0.2pp)

4.1%

3.8%

(0.3pp)

Net loss (million TRY)

(16.5)

(18.0)

9.1%

(65.6)

(79.2)

20.7%

Capex (million TRY)

7.8

10.6

35.9%

19.9

25.4

27.6%

(*)BeST, in which we hold an 80% stake, has operated in Belarus since
July 2008.

BeST revenues rose by 14.7% year-on-year in Q417 in local
currency terms, driven mainly by growth in voice and mobile data
revenues. EBITDA rose by 12.5% leading to an EBITDA margin of 6.0%.
BeSTs revenues in TRY terms rose by 30.8% year-on-year in Q417.

For the full year, revenues in local currency terms rose by 13.4%, while
EBITDA increased by 10.3% leading to an EBITDA margin of 3.8%. Revenues
in TRY terms increased by 40.3%, while EBITDA rose by 29.0%.

BeST continued to offer its 4G services in all regions of Belarus
increasing its coverage. The increased number of 4G users and higher
data consumption led to increased data revenues. Meanwhile, BeST
continued to increase the penetration of its digital services within its
customer base in accordance with Turkcells global digital services
strategy.

Kuzey Kbrs Turkcell (million TRY)*

Quarter

Year

Q416

Q417

y/y%

FY16

FY17

y/y%

Number of subscribers (million)

0.5

0.5

-

0.5

0.5

-

Revenue

35.7

41.2

15.4%

135.9

158.2

16.4%

EBITDA

12.3

10.6

(13.8%)

50.0

53.0

6.0%

EBITDA margin

34.4%

25.7%

(8.7pp)

36.8%

33.5%

(3.3pp)

Net income

3.6

7.7

113.9%

28.6

34.0

18.9%

Capex

11.4

14.2

24.6%

24.4

41.8

71.3%

(*) Kuzey Kbrs Turkcell, in which we hold a 100% stake, has operated
in Northern Cyprus since 1999.

Kuzey Kbrs Turkcell revenues grew by 15.4% year-on-year in Q417
on the back of growing mobile data and device sales revenues. EBITDA
declined by 13.8% leading to an EBITDA margin of 25.7%, mainly due to
the increase in cost of devices sold and interconnection costs.

For the full year, revenues rose by 16.4%, while EBITDA growth was 6.0%.
This led to a 3.3pp decline in EBITDA margin to 33.5% mainly due to
increased cost of devices sold.

Fintur has operations in Azerbaijan, Kazakhstan, Moldova and
Georgia, and we hold a 41.45% stake in the company.In accordance
with our strategic approach and IFRS requirements, Fintur is classified
as held for sale and reported as discontinued operations as of October
2016.

On January 25th, 2018, Fintur has signed a binding agreement
with Silknet JSC, a joint stock company in Georgia, to transfer its 100%
total shareholding in Geocell, for US$153 million. The transaction is
expected to be completed once regulatory approvals are received. The
transaction has no impact on our financial statements since Fintur is
classified as assets held for sale in our financials.

Turkcell Group Subscribers

Turkcell Group subscribers amountedto approximately 50.2 million
as of December 31, 2017. This figure is calculated by taking the number
of subscribers of Turkcell Turkey and each of our subsidiaries. It
includes the total number of mobile, fiber, ADSL and IPTV subscribers of
Turkcell Turkey, and the mobile subscribers of lifecell and BeST, as
well as those of Kuzey Kbrs Turkcell and Turkcell Europe.

Turkcell Group Subscribers

Q416

Q417

y/y %

Mobile Postpaid (million)

17.4

18.5

6.3%

Mobile Prepaid (million)

15.7

15.6

(0.6%)

Fiber (thousand)

1,043.9

1,204.3

15.4%

ADSL (thousand)

818.0

921.4

12.6%

IPTV (thousand)

359.7

505.9

40.6%

Turkcell Turkey subscribers (million)
1

35.3

36.7

4.0%

Ukraine

12.4

11.1

(10.5%)

Belarus

1.6

1.6

-

Kuzey Kbrs Turkcell

0.5

0.5

-

Turkcell Europe2

0.3

0.3

-

Turkcell Group Subscribers (million)

50.1

50.2

0.2%

(1) Subscribers to more than one service are counted separately for each
service.(2) The wholesale traffic purchase agreement, signed
between Turkcell Europe GmbH operating in Germany and Deutsche Telekom
for five years in 2010, had been modified to reflect the shift in
business model to a marketing partnership. The new agreement between
Turkcell and a subsidiary of Deutsche Telekom was signed on August 27,
2014. The transfer of Turkcell Europe operations to Deutsche Telekoms
subsidiary was completed on January 15, 2015. Subscribers are still
included in the Turkcell Group Subscriber figure.

OVERVIEW OF THE MACROECONOMIC ENVIRONMENT

The foreign exchange rates used in our financial reporting, along with
certain macroeconomic indicators, are set out below.

Quarter

Year

Q416

Q317

Q417

y/y%

q/q%

FY16

FY17

y/y%

GDP Growth (Turkey)

4.2%

11.1%

n.a.

n.a.

n.a.

3.2%

n.a.

n.a.

Consumer Price Index (Turkey)

3.6%

1.3%

4.3%

0.7pp

3.0pp

8.5%

11.9%

3.4pp

US$ / TRY rate

Closing Rate

3.5192

3.5521

3.7719

7.2%

6.2%

3.5192

3.7719

7.2%

Average Rate

3.2591

3.4999

3.7942

16.4%

8.4%

3.0059

3.6308

20.8%

EUR / TRY rate

Closing Rate

3.7099

4.1924

4.5155

21.7%

7.7%

3.7099

4.5155

21.7%

Average Rate

3.5147

4.1241

4.4747

27.3%

8.5%

3.3179

4.1087

23.8%

US$ / UAH rate

Closing Rate

27.19

26.52

28.07

3.2%

5.8%

27.19

28.07

3.2%

Average Rate

25.88

25.94

27.05

4.5%

4.3%

25.56

26.64

4.2%

US$ / BYN rate*

Closing Rate

1.9585

1.9623

1.9727

0.7%

0.5%

1.9585

1.9727

0.7%

Average Rate

1.9403

1.9404

1.9812

2.1%

2.1%

1.9846

1.9278

(2.8%)

* The official currency of the Republic of Belarus has been
redenominated on July 1, 2016. As a result, BYR10,000 has become BYN1
starting from 1 July 2016. Prior periods have been adjusted accordingly
for presentation purposes.

RECONCILIATION OF NON-GAAP FINANCIAL MEASUREMENTS:
We believe
Adjusted EBITDA, among other measures, facilitates performance
comparisons from period to period and management decision making. It
also facilitates performance comparisons from company to company.
Adjusted EBITDA as a performance measure eliminates potential
differences caused by variations in capital structures (affecting
interest expense), tax positions (such as the impact of changes in
effective tax rates on periods or companies) and the age and book
depreciation of tangible assets (affecting relative depreciation
expense). We also present Adjusted EBITDA because we believe it is
frequently used by securities analysts, investors and other interested
parties in evaluating the performance of other mobile operators in the
telecommunications industry in Europe, many of which present Adjusted
EBITDA when reporting their results.

Nevertheless, Adjusted EBITDA has limitations as an analytical tool,
and you should not consider it in isolation from, or as a substitute for
analysis of, our results of operations, as reported under IFRS. The
following table provides a reconciliation of Adjusted EBITDA, as
calculated using financial data prepared in accordance with IFRS as
issued by the IASB, to net profit, which we believe is the most directly
comparable financial measure calculated and presented in accordance with
IFRS as issued by the IASB.

Turkcell Group (million TRY)

Quarter

Year

Q416

Q417

y/y%

FY16

FY17

y/y%

Adjusted EBITDA

1,371.1

1,738.9

26.8%

4,619.5

6,228.3

34.8%

Depreciation and amortization

(604.3)

(700.5)

15.9%

(2,203.2)

(2,597.0)

17.9%

Finance income

493.9

471.3

(4.6%)

1,064.8

1,090.4

2.4%

Finance costs

(692.2)

(578.0)

(16.5%)

(1,237.6)

(1,413.3)

14.2%

Other income / (expense)

(44.4)

(625.8)

n.m

(234.3)

(698.9)

198.3%

Consolidated profit from continued operations before income tax &
minority interest

524.1

305.8

(41.7%)

2,009.2

2,609.5

29.9%

Income tax expense

(111.3)

(69.5)

(37.6%)

(423.2)

(571.8)

35.1%

Consolidated profit from continued operations before minority
interest

412.8

236.3

(42.8%)

1,586.0

2,037.8

28.5%

Discontinued operations

(44.4)

-

n.m

(42.2)

-

n.m

Consolidated profit before minority interest

368.4

236.3

(35.9%)

1,543.8

2,037.8

32.0%

NOTICE:
This release includes forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, Section
21E of the Securities Exchange Act of 1934 and the Safe Harbor
provisions of the US Private Securities Litigation Reform Act of 1995.
This includes, in particular, our targets for revenue, EBITDA and capex
for 2018. More generally, all statements other than statements of
historical facts included in this press release, including, without
limitation, certain statements regarding the launch and goals of our
payment card business, our operations, financial position and business
strategy may constitute forward-looking statements.
In addition,
forward-looking statements generally can be identified by the use of
forward-looking terminology such as, among others, "will," "expect,"
"intend," "estimate," "believe", "continue" and guidance.

Although Turkcell believes that the expectations reflected in such
forward-looking statements are reasonable at this time, it can give no
assurance that such expectations will prove to be correct.
All
subsequent written and oral forward-looking statements attributable to
us are expressly qualified in their entirety by reference to these
cautionary statements. For a discussion of certain factors that may
affect the outcome of such forward looking statements, see our Annual
Report on Form 20-F for 2016 filed with the U.S. Securities and Exchange
Commission, and in particular the risk factor section therein. We
undertake no duty to update or revise any forward looking statements,
whether as a result of new information, future events or otherwise.

The Company makes no representation as to the accuracy or
completeness of the information contained in this press release, which
remains subject to verification, completion and change. No
responsibility or liability is or will be accepted by the Company or any
of its subsidiaries, board members, officers, employees or agents as to
or in relation to the accuracy or completeness of the information
contained in this press release or any other written or oral information
made available to any interested party or its advisers.

ABOUT TURKCELL:
Turkcell is a digital operator headquartered
in Turkey, serving its customers with its unique portfolio of digital
services along with voice, messaging, data and IPTV services on its
mobile and fixed networks. Turkcell Group companies operate in 9
countries Turkey, Ukraine, Belarus, Northern Cyprus, Germany,
Azerbaijan, Kazakhstan, Georgia, Moldova. Turkcell launched LTE services
in its home country on April 1
st
, 2016,
employing LTE-Advanced and 3 carrier aggregation technologies in 81
cities. In 2G and 3G, Turkcells population coverage in Turkey is at
99.61% and 97.94%, respectively, as of December, 2017. Turkcell offers
up to 1 Gbps fiber internet speed with its FTTH services. Turkcell Group
reported TRY17.6 billion revenue in FY17 with total assets of TRY34.0
billion as of December 31, 2017. It has been listed on the NYSE and the
BIST since July 2000, and is the only NYSE-listed company in Turkey.
Read more at
www.turkcell.com.tr

This press release can also be viewed using the Turkcell Investor
Relation app, which can be downloaded
here
for
iOS, and
here
for
Android mobile devices.